It's not exactly a news flash, but the former glorious epicenter of the housing boom is now the infamous ground zero of the housing crash. DataQuick Information Systems reported today that California foreclosures shot up 158 percent during the second quarter from year-ago levels:
Lenders filed 53,943 Notices of Default (NoDs) during the April-through-June period. That was up 15.4 percent from 46,760 for the previous quarter, and up 158.0 percent from 20,909 for second-quarter 2006 ... Last quarter's default level was the highest since 54,045 NoDs were recorded statewide in fourth-quarter 1996. Defaults peaked in first-quarter 1996 at 61,541. A low of 12,417 was reached in third-quarter 2004. An average of 34,172 NoDs have been filed quarterly since 1992, when DataQuick's NoD statistics begin.
Perhaps the most ominous part, however, was the mention that "most of the loans that went into default last quarter were originated between July 2005 and August 2006." The loans originated in the back half of 2006 -- along with the first half of 2006 -- likely may represent perhaps the worst mortgage vintage in modern lending history, particularly in terms of subprime credit grades. And these are the loans that have yet to enter the default process en masse.